Originated from  France in 1998, Ventech has two independent teams: Ventech Europe having 5 funds under management and Ventech China having 3 funds under management.

Ventech China entered China market in 2007 and officially started to invest in 2008. During more than 10 years investment in China, Ventech China keeps its steady investment pace and clear focus. As a result, the IRR significantly exceeds the industry average.

At the 6th ‘WISE conference-WISE 2018 the king of the New Economy’, Ventech China won the title of ‘Top 10 of China's Most Promising Venture Capitals’, while Keep and Super monkey (invested by Ventech China from Series A) were also awarded ‘King of the New Economy’.

In contrast to the outstanding investment performance, Ventech China always keeps a low profile.However, this time, the founder of Ventech China Eric Huet gave an interview.

What insight does Eric have for China market? What is the investment philosophy of Ventech China team? What are the wonderful stories behind the Investment Cases? Here's an excerpt from the interview.

Investment Philosophy: "focus on the middle class, understand their needs, and invest in companies that meet those needs. "

Ventech China' focuses on four areas: Consuming, TMT, Corporate Services, and Fintech. In all four areas, Ventech China's portfolio companies have something in common, and Eric concludes in a nutshell: "We're care about the middle class, ".

36 Kr: What is Ventech China’s investment philosophy?

Eric: When we evaluate a project, we care about whether it meets the needs of the new middle class. Content quality is of the most important factor, and we will see if the content of the product meets the actual needs of the targeted users. Keep is a good example. The middle class has a need for fitness, but how to achieve the goal? Keep uses premium content to help them get fit, thus the needs can be satisfied.

36 Kr: The needs of middle-class are changing, and I understand that investing is not only an insight of current needs, but also a forecast for tomorrow's needs. How do we invest with forward-looking?

Eric: We undertake in-depth research of the industry, usually we have already investigated the industry for a year or two before we make an investment. Ventech China has a systematic approach, a professional research team, and we observe what happens in the industry, what each player is doing, and then we will have a judgment about what kind of companies can bring real opportunities. We will make decisions when we find a company that meets the criteria.

Taking Wise Media as an example: we have focused on digital advertising services for a long time, but we didn't find a company that could meet our standards until Wise Media, and I believe Wise Media meets our standards, so we invested in it.

36 Kr: Did Ventech China's has remarkable investment history, including Secoo, Jimu, Wonderfull. Do you think Ventech European has brought a unique edge in investing in consuming market.

Eric: That's right. The reason why Ventech China is doing so well is that we have a great team. Our team members combine both Chinese and European backgrounds and resources. Ventech China has native investors who have deep insights of the Chinese market, and one european like me who have experienced the transformation of middle-class needs in Western countries. We understand the aesthetic and needs of the middle class.

It does not mean that the European market is more "sophisticated", but Europe has already experienced the changes that many Chinese middle-class consumers are now experiencing. However, the Chinese market does not necessarily need to learn from Europe, but there are some points of convergence in the evolution of society that are worth thinking deeply.

36 Kr: Ventech China invests in both 2C companies and 2B companies. What do you think of any fundamental differences between the investing in 2B and 2C companies?

Eric: I think it is essentially the same thing, and ultimately the question is whether the product satisfies user's needs. Even if the commercial application of big data and AI are B2B business model, it eventually becomes B2B2C.

36 Kr: How do you personally see the difference of venture capital ecosystem in China and Europe?

Eric: Many startups in Europe are optimizing retail process while Chinese companies are more innovative in business models. In addition, the application of AI and big data is more mature in Chinese market.

36 Kr: Which kind of innovation do you prefer: business model innovation or technology-driven innovation?

Eric: I think they both have their unique advantages. Technology-based innovations like AI and blockchain have led to enormous business opportunities. A disruptive business model is also worth investing as long as it can better satisfy the market needs.

Investment style: prudent, professional, people oriented and business focus

More than half of Ventech China LPs are industrial corporations including retail groups, real estate, banks, insurance companies and FMCG companies. The industry resources and industry know-hows of these world-renowned companies have also been shared to the startups through Ventech.

James Jin, Ventech China's managing partner, said at WISE conference this year: "There is the win-win cooperation between Ventech China and its LPs. On one hand, LP can be aware of the innovation trends in the market through Ventech China, Ventech China can also make full utilization of these resources and background to help portfolio companies with the possibility of industry collaborations. Ventech China will first understand the resources and relationships that LPs can put in place and secondly look for suitable projects or even incubate some projects in terms of the needs of LPs. In this way, the project can grow faster with the support of Ventech China. This is called the one-stop service concept from investment to exit.

Ventech China's European genes are reflected not only in the background of LPs and the understanding of middle-class consumption, but also in its solid investment style. For example, Ventech China does not make "gambling" investment or irrational investment in hot areas. Behind every investment decision, there is solid and in-depth industry research.

Ventech China's investment pace is stable, with more than 2,000 projects met per year and 7-8 realised investments. Behind the prudent investment style is the principle of making professional investments and driving investment decisions with an understanding of the market and consumers and this principle has been repeatedly emphasized by Eric.

“we make rational decision” says James Jin, “Essentially, we are helping LPs manage their wealth. To help maximize the benefits of LPs, we need to maintain the highest level of professionalism."

36 Kr: How long is Ventech  China's decision-making cycle from meeting the founder to deciding whether to invest or not?

Eric: We usually meet the team three or four times. After the first time, we will conduct a comprehensive and in-depth analysis of the company's industry and competition. Each time we have a project that we are very interested in, we have four to five team members to carry out research at the same time.

For example, before we were ready to invest in Jumei.com, we talked with 30 companies in the industry. Another example is that we talked with nearly 60 companies before investing in Jimu Box (Note: P2P Lending). Eventually, while many companies failed we invested in a real leader that is on the NASDAQ now.

Before signing the SPA, we often talked with 30-40 companies in the industry. Competitors will give us a different perspective to examine the industry. On average We look at around 2,000 companies a year, but we typically only invest 4-7 companies a year.

36 Kr: What kind of qualities does Ventech China value on founder and the team?

Eric: I value founder’s vision and execution, as well as team’s professionalism in the industry. For example, in Fin-tech industry, whether CTO has the experience in finance realm is important. I will examine whether the team has experts in different positions and if CEO can stimulate the maximum output from everyone. We spend a lot of time talking to the founding team about their expertise, the way they solve problems and their attitude towards the difficulties, which are inevitable during the entrepreneurship process.

36 Kr: Is there any regretful stories?

Eric: Five years ago, I met Cheng Wei and discussed with him for two hours. And finally, I decide not to invest. And the biggest reason is that I am French and the French transportation system is very different from Chinese transportation system (Laughter). Cheng Wei told me that they will need to raise USD 300m in six months. I didn't believe he could but he did it. To be honest, it’s not about regret or not. Later I met with Mobike and I didn’t invest either. I am not convinced by their business model and I only invest those companies in the industry that I understand.

36 Kr: It seems like you don't like transportation very much. Let’s talk about Keep. As an early investor of Keep, what was your consideration at the time?

Eric: When I first met Wang Ning, I liked him very much. As a founder, he has a clear vision and a specific plan. Even though he is very young, he possesses a profound understanding of the market. His willpower also convinced me that he would lead the team to achieve something special. Of course, we conducted the detailed due diligence, competitive research, and other necessary procedures, but I liked Wang Ning at the very beginning of the conversation.

36 Kr: How did Ventech China get the hot deals like Keep when various institutions were competing for that?

Eric: Understanding the entrepreneurs is very important. Investors are not just looking for money from investors, but also the understanding and the approval from us. At the same time, we will provide a lot of necessary resources to our portfolio companies. Take one of our portfolio company Secoo as an example, a great number of our LPs are from famous French luxury companies. We have introduced many of the top companies to Secoo’s CEO. And company like Jumei, we have connected them with various luxury industry resources as well, which plays a huge role in its future business expansion. Last but not least, we share experience and insights from Europe with our portfolio companies.

Prospects of Future: the Chinese market is still promising, “winter” is a best time for survival of the fittest.

Talking about the “Capital Winter", "Economic Cycle", Eric is still very optimistic. He has confidence in the potential of the Chinese market. Eric thinks there are many reasons of current situation in the Chinese market. On the one hand, the impact is from the economic cycle. On the other hand, there are many immature funds without a clear strategy. The way they make decisions is like gambling, resulting in many bubbles. An environment that tends to calm down is actually better for both start-ups and investors. Those immature institutes will eventually be eliminated from the cold market.

"Ventech China never gamble and we only make professional investments. So, I don’t think the market winter will have a big impact on us. In 2019, Ventech will still focus on areas that we have been working on: Consumers, Technology, Education and maybe later individual health.” Eric also stressed that Ventech would focus on the middle class no matter what track it belongs to.